Bankruptcy offers the perfect opportunity to rebuild your credit score by using credit cards and other forms of debt shrewdly.
Here a few tips on how to master the credit score game after filing bankruptcy:
Tip #1 – Go for the top credit cards and other loan products first. Many debtors mistakenly believe that once they file for bankruptcy they are forever relegated to the “trash heap” of creditors who charge outrageous interest rates and annual fees. But many top tier credit card companies and other lenders have programs especially designed for debtors trying to rebuild their credit after bankruptcy. So you don’t need to go straight to the “subprime” market, debtors emerging from bankruptcy should ask top tier creditors about their programs for those attempting to rebuild their credit score.
Tip #2 – Pay all of your bills on time. This cannot be said enough. After a debtor files for bankruptcy, they are literally getting a second chance. All of your old mistakes are forgiven and now you have the chance to prove that you’re a changed person. Don’t mess it up. Make sure you pay every bill on time without fail, even if you need to setup an automatic repayment system to achieve that goal.
Tip #3 – Don’t overextend yourself on debt. Once you emerge from bankruptcy, it may be surprising; but you will begin receiving a lot of credit card offers. Unfortunately, this is where a lot of debtors who filed for bankruptcy make their biggest mistake. They begin to load up on debt such as a car loan, credit card, personal loan and even those retailer credit cards and their ridiculously high interest rates. This is a sure road to bankruptcy again. Don’t do it. Take your time and avoid getting too much credit card debt too soon. After emerging from bankruptcy, it’s advisable to get a secured credit card at the most and to wait a year or two before buying a car or even a house. And even then, your debt obligations should not be more than 30% of your take home pay.